SS82: How to Hire the Right Property Manager for Your Properties

Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing how do you hire the right property manager for your properties?

Your property manager is the most important member of your real estate team. In this episode, Charles explains what you should be looking out for when hiring one and what differentiates an average property manager from a good property manager.

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Talking Points:

The property manager is the most important person in your real estate business. They are managing your asset and they are managing your clients (your tenants) on a daily basis.
There is not one type of property manager for all properties. It takes a specific manager to handle specific properties and tenants. What is their area of expertise? I always suggest speaking to landlords with similar properties and asking for property management referrals. This is where I have found the best managers. Don’t start searching the internet for property managers; you are most likely going to find Realtors who manage condos for out-of-state owners; not what you want when you own a 15-unit property.
Before we start; let me tell you what I want to see and hear when speaking to a property manager. 1. I got their information from a trusted local landlord. 2. They currently manage property in my city – specifically within a ½ mile to 1 mile of where my properties are located. 3. They have been involved in property management (in that area) for 10+ years. 4. They have knowledgeable handymen on staff and have a list of trusted contractors who discount their work (I call this; no yellow page pricing). In other words, I do not need to find more reasonably priced contractors when a problem arises that requires a licensed person. 5. They have a system in place for collecting rent and a strict policy of sending out notices and beginning evictions. How aggressive are they? 6. They don’t need to call me for every little thing. In the beginning, they will call you more often but; if there is a problem, don’t call me and have me suggest a solution; this is YOUR job. I have had this happen before and those managers were gone. 7. They are able to control expenses. Don’t send out a $100 per hour electrician for changing some light fixtures; call your handymen and have this work taken care of.
When interviewing managers; get a price list of what it will cost for different services that they are providing. If they are handling snow, mowing, and janitorial services; what will this cost?
Fees; fees are important; we are here to make money. What is your percentage fee? What do you charge on new rentals and on renewals? How much per hour do you charge for handymen? What about junk fees; I hate junk fees! I was once charged a monthly bank account fee (from the manager) of $25; for an account that had deposits of $12k+ per month. Obviously, this was the manager’s fee, not the bank and it was never disclosed upfront.
Integrity is another point that is important but you really don’t know about this until they start managing your property. I have been selling properties that were managed before and the manager tried to circumvent the broker who had the listing with another buyer; not the most trustworthy person; if I wasn’t selling, I would have changed them out within 60 days. The best part of this situation was that I met the manager via referral from the broker! That broker will not be referring them ever again.
It is always preferred that the manager is depositing funds into YOUR property bank account, not theirs. They can be a signer as well but it should be your account.
You have to watch all expenses and read all reports. You need to regularly log in to bank accounts and set up alerts for every deposit and for every debit.
You can trust but you need to verify!
Lastly, be prepared to put people in line when you feel something is going the wrong way. If you are not happy and you feel the properties are not being managed properly; say something and set up a meeting. Make sure you are not overreacting. I would think about it for a bit before reaching out and saying anything; possibly speak to another investor and explain the problem since you do not want a manager to just terminate your property management contract.

No one is going to manage your properties as you will; it is the truth and if you want to build a real estate portfolio; it is something that you need to accept or you can build your own property management team but I do not recommend this unless you have 100+ units.

Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing, how do you hire the right property manager for your properties?

Charles:
Have you always wanted to invest in real estate, but didn’t have the time, didn’t know where to find the deals, couldn’t get the funding and didn’t want tenants calling you. Since 2006, I’ve been buying income producing properties and great locations that provide us with consistent passive income. While we wait for appreciation in the future and take advantage of tax laws while we’re waiting and unlike your financial advisor, we invest alongside our investors in every property we purchase. Check out to investwithharborside.com. If you like the idea of investing real estate, if you like the idea of passive income partner with us at investwithharborside.com, that’s investwithharborside.com.

Charles:
The property manager is the most important person in your real estate business. They’re managing your asset and they’re managing your clients, your tenants on a daily basis, which is usually more difficult than managing the property itself.

Charles:
There is not one type of property manager for all properties. It takes a specific manager to handle specific properties and specific tenants. So what is their area of expertise? I always suggest speaking to landlords with similar properties and ask for property management referrals. This is where I have found the best managers don’t start searching the internet for property managers. You are most likely gonna find realtors who manage condos for out-of-state owners, not what you want when you own a 15 unit building. So before we start, let me tell you what I want to see and hear when speaking to a property manager, number one, I got their information from a trusted local landlord. Two. They currently manage property in my city, specifically within a half mile to one mile of where my properties are located. Three they’ve been involved in property management in that area for 10 plus years, four, they have knowledgeable handymen on staff and have a list of trusted contractors who discount their work.

Charles:
I call this no yellow page pricing. And in other words, I do not need to find more reasonably priced contractors. When a problem arises that requires a licensed person. For example, years back, I had a handyman or excuse me, a property manager that utilized a plumber that would charge $985. I remember it for sneaking out a Maine and my plumber in that area would do it for like 300 bucks. And it just goes to show you why isn’t that $300 person working for her? Why does she have someone that’s three and a half times more expensive doing work? That’s just crazy. And that’s a red flag. Five. They have a system in place for collecting rent and a strict policy of sending out notices and beginning evictions. How aggressive are they with their collections? Six. They don’t need to call me for every little thing in the beginning.

Charles:
They’ll call you more often. But if there is a problem, don’t call me, have me suggest a solution. This is your job. I’ve had this happen before. And those managers were gone seven, they’re able to control expenses. Don’t send out a hundred dollars per hour electrician for changing some light fixtures, call your handymen and have the work taken care of when interviewing managers and get a price list of what it will cost for different services that they are providing. If they’re handling snow mowing janitorial services, what will this cost per property? And how often are they doing that? You know, you have some people in smaller properties. They might just sweep the hallways in clean hallways once a month. They might have it done twice a month. It, it, you know, you’ll know cuz you’ve owned the property most likely how long and how dirty it gets.

Charles:
And you can tell them, this is how often we want it done. And what’s the price for that. Now fees, fees are important. You know, we are here to make money. So what is your percentage fee? What do you charge on new rentals? What do you charge on lease renewals? How much per hour do you charge for handyman? Is it the same price during the day as it is after hours? Weekends? What about junk fees? You know, I hate junk fees. I was once charged a monthly bank account fee from the manager for like 25 bucks. And it wasn’t that much, but it’s just a thing that for an account that had the deposits and the tens of thousands of dollars, you know, obviously this was the manager’s fee, not the bank fee and it was never disclosed up front, which what really hurts the most because when you’re doing out your numbers, even if it’s a little number like that, you know, after five or 10 years, that’s thousands of dollars.

Charles:
Integrity is another point that is very important, but you really don’t know about this until you start managing your property. I’ve been selling properties that were managed before and the manager tried to circumvent the broker who had the listing with another buyer, not the most trustworthy people. If I wasn’t selling, I would’ve changed them out within 60 days. You know, the best part of the situation was that I met a manager, a V referral from the broker and that broker will not be referring them anymore to any other buyers or sellers. It is always preferred that the manager is depositing funds into your property bank account, not theirs. They can be a signer as well, and they’ll have to be when writing checks out, but it should be your account that you have like online access to and everything like that. And you’re getting all the alerts, you know, exactly what’s happening.

Charles:
And obviously at the end of the month too, you can move your money out of there or move additional money out of there. And even keep your reserves in accounts that are just owned by yourself. You have to watch all expenses and read all reports. You need to regularly log into bank accounts and set up alerts for every deposit. And for every debit you can trust, but you need to verify lastly, be prepared to put people in line when you feel something is going the wrong way. If you’re not happy and you feel the properties are not being managed properly, say something and set up a meeting with them, you know, make sure you’re not overreacting. I would think that it, you know, for a little bit before reaching out and saying anything. So if something happens, think about it, maybe speak to your partner or someone else or a mentor.

Charles:
And then and then, you know, explain the problem to them and then see what they would do. Or just let yourself cool down a little bit. If there’s a big bill or they should have called you think about it before you react before you talk to ’em, you know, no one is gonna manage your properties like you will. And that’s very important to understand going into this business. It is the truth. And if you want to build a real estate portfolio, it is something that you just need to accept, or you can build your own property management team, but I don’t recommend this unless you have like a hundred plus units in one area. So I hope you enjoyed. Please remember to rate, review, subscribe, submit comments, and potential show topics at global investors, podcast.com look forward to two episodes next week. See you then.

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